Search age:

Search in:

Woodside asks for patience on growth plans

Kim Christian

Woodside chief executive Peter Coleman has asked for patience as the company takes on growth projects and a major cost cutting drive.

But shareholders have queried whether the its two big projects, Browse and Leviathan, will set the company up for its next phase of expansion and deliver strong returns.

The energy giant is trying to finalise tax issues on the Leviathan natural gas joint venture project in Israel, while the early engineering and design work for the Browse offshore project in Western Australia is planned for later this year.

Mr Coleman said Woodside was ready to take the next step, but confirmed the company was now targeting a 30 per cent reduction in costs.

Advertisement

"With respect to shareholders, I'd ask them to be patient," Mr Coleman told reporters after the company's annual general meeting on Wednesday.

He warned about the potential cost of rushing into projects just to get "runs on the board", and added Woodside had not committed any money to the Leviathan project.

"Those runs cost wickets - big time," he said.

"At the moment it's an expensive world we're in and we need to wait for both regional and global cycles to work through."

He said Woodside had returned cash to shareholders during a time of limited growth opportunities, and some opportunities were starting to materialise.

"I'd actually be pleased that we haven't gone snap on something and gone `oh my goodness, why did I do that?'" he said.

But he also conceded the company's decision to hold off signing definitive agreements to finalise entry into Leviathan had been difficult.

Woodside missed a March 27 deadline to seal a $US2.7 billion deal for a stake in the project.

A final investment decision by the Browse joint venture is due in the second half of 2015.

The company's cost reduction program would focus on areas such as procurement, supply chain, design standards and construction techniques, rather than redundancies, Mr Coleman said.

Cost reductions at Browse would involve areas such as drilling, sub-sea equipment and pipelines.

"We're targeting a basic reduction across our business of 30 per cent, meaning our unit development cost, our aspiration is to reduce that by 30 per cent," he said.

Over the next two to three years Woodside's cost cutting program would examine production, cost structures and outsourcing, Mr Coleman said.